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The Chinese term equivalent to "New Taiwan dollar", 新臺幣 or 新台幣, is used only in contexts where it is necessary to avoid any ambiguity, such as banking, contracts, or foreign exchange. In common usage, the unit is typically referred to as yuán. In Taiwan, the character for yuan can be written in either of two forms, an informal 元 or a formal 圓, which are interchangeable. Colloquial alternatives for the currency unit include the Mandarinkuài (塊), meaning "piece", and the Taiwanese Hokkienkho͘ (箍; literally "circle"). In English usage the new Taiwan dollar is often abbreviated as NT, NT$, NT Dollar or NTD, while the abbreviation TWD is typically used in the context of foreign exchange rates. Subdivisions of a new Taiwan dollar are rarely used, since practically all products on the consumer market are sold in whole dollars.

The New Taiwan dollar was first issued by the Bank of Taiwan on June 15, 1949, to replace the Old Taiwan dollar at a ratio of 40,000 to one. The first goal of the New Taiwan dollar was to end the hyperinflation that had plagued Nationalist China due to the Chinese Civil War.

Even though the New Taiwan dollar was the de facto currency of Taiwan, for years the silver yuan remained the legal currency. The value of the silver yuan was decoupled from the value of silver during World War II. Many older statutes have fines and fees given in this currency.

According to statute, one silver yuan is worth three New Taiwan dollars.[2] Despite decades of inflation, this ratio has not been adjusted. This made the silver yuan a purely notational currency long ago, nearly impossible to buy, sell, or use.

When the Temporary Provisions were made ineffective in 1991, the ROC lacked a legal national currency until the year 2000, when the Central Bank of China (CBC) replaced the Bank of Taiwan in issuing NT bills.[1] In July 2000, the New Taiwan dollar became Taiwan's legal currency. It is no longer secondary to the silver yuan. At this time, the central bank began issuing New Taiwan dollar banknotes, and the notes issued earlier by the Bank of Taiwan were taken out of circulation.

The exchange rate compared to the United States dollar has varied from less than ten to one in the mid-1950s, more than forty to one in the 1960s, and about twenty-five to one in 1992. The exchange rate as of November 2015 is 32.7 to one.[3]

Coins are minted by the Central Mint of China, while notes are printed by the China Engraving and Printing Works. Both are run by the Central Bank. The NT$1⁄2 coin is rare because of its low value, while the NT$20 coin is rare because of the government's lack of willingness to promote it. As of 2010, the cost of the raw materials in a NT$1⁄2 coin was more than the face value of the coin.

The current series of banknotes for the new Taiwan dollar began circulation in July 2000. This set was introduced when the new Taiwan dollar succeeded the silver yuan as the official currency within Taiwan.

The current set includes banknotes for NT$100, NT$200, NT$500, NT$1000, and NT$2000. Note that the NT$200 and NT$2000 banknotes are not commonly used by consumers. This may be due to the tendencies of consumers to simply use multiple NT$100 or NT$500 bills to cover the range of the NT$200, as well as using NT$1000 bills or credit/debit cards instead of the NT$2000 bill. Lack of government promotion may also be a contributing factor to the general lack of usage.

It is relatively easy for the government to disseminate these denominations through various government bodies that do official business with the citizens, such as the post office, the tax authority, or state owned banks. There is also a conspiracy theory against the Democratic Progressive Party, the ruling party at the time the two denominations were issued. The conspiracy states that putting Chiang Kai-shek on a rarely used banknote would "practically" remove him from the currency, while "nominally" including him on the currency would not upset supporters on the other side of the political spectrum that much (the Pan-Blue Coalition).

The year 2000 version $500 and 1999 version $1000 notes without holographic strip were officially taken out of circulation on August 1, 2007. They were redeemable at commercial banks until September 30, 2007. As of October 1, 2007, only the Bank of Taiwan accepts such notes.[9]

On 6 January 2011, the Central Bank issued a new 100-dollar legal tender circulating commemorative in celebration of the 100th anniversary of the founding of the Republic of China. The red paper note measures 145 × 70 mm and features a portrait of Dr. Sun Yat-Sen on the front, and the Chung-Shan Building on the back. The design is no different from the ordinary NT$100 note, except for the wording in Chinese language in the reverse of the note, which reads: “Celebrating the 100 years of founding of the Republic of China.”[10]